Raymond James Cuts ExpressJet to 'Outperform'
Raymond James downgraded ExpressJet Holdings (XJT ) to outperform from strong buy.
ExpressJet, one of the world's largest reginonal airlines, amended a capacity purchase deal with Continental and a purchase deal with Embraer-Empresa Brasil, to slow the pace of regional jet deliveries.
Analyst James Parker says ExpressJet will defer some regional jet deliveries. He cut the $1.53 2003 earnings per share estimate to $1.49, and cut the $1.76 2004 estimate to $1.58 due to lower block hours and increased costs per block hour. He thinks the deferral is a result of Continental electing to delay regional jet deliveries rather than parking its own mainline aircraft or decreasing utilization of mainline fleet. He notes Continental is permitted to do this in its contract with ExpressJet; Continental owns 54% of ExpressJet.
Parker says the move gives appearance to Continental deferring ExpressJet's growth to keep its mainline aircraft more fully utilized. He cut the target to $16.